The global gold market showed a historic performance in the second quarter of 2025, once again turning investors' focus on it. According to the Gold Demand Trends report published by the World Gold Council (WGC), total gold demand in the second quarter of the year increased by 3% year-on-year to 1249 tons. On a value-by-value basis, demand rose a record 45% to $132 billion. This went on record as one of the strongest second quarters ever recorded in the gold market.

Behind this performance is investors' growing need for safe havens and strong momentum in prices. The fragile structure of the global economy, unpredictable policy steps by the United States, and escalating tensions on the geopolitical front have made gold attractive to both individual and institutional investors. Trade wars, regional conflicts and global debt worries in particular have led investors to turn to gold in search of protecting their portfolios.

Exceptional Leap in Investment Demand

The highlight of the second quarter was the remarkable increase in investment demand. Gold investments increased 78% year-on-year and this increase was led by gold exchange mutual funds (ETFs). ETFs stood out as the main engine of global gold demand, while investments in bullion and coins also continued their strong run, rising 11%.

As far as investors are concerned, gold has become not only a value protection tool in the first half of 2025, but also an asset that offers high return potential. In the first six months of the year Gold prices are up 26% in dollar terms outperformed many asset classes, including stocks and bonds. This strong performance led to an increase in the share allocated to gold in the portfolios.

Central Banks' Purchases Slow Even as Purchases Continue

Global central banks continued to increase gold reserves in the second quarter, but purchases took place at a slower pace. 166 tons of gold in total added to reserves. The WGC's annual central bank survey shows that 95% of reserve managers plan to increase their gold holdings in the next 12 months. This data indicates that the strategic importance of gold in long-term reserve management has not changed.

Central banks continue their purchases of gold under increasing risks and reserve diversification strategies in the global financial system, while not sacrificing safe haven charm despite high prices. Emerging economies in particular are aiming to offset their risks by increasing their gold reserves against the global weight of the dollar.

Demand for Jewellery Continues to Decline

The weakest pillar of global gold demand was the jewelry segment. Total jewellery demand fell by 14% declined to levels seen during the pandemic. The demand for jewelry in China decreased by 20% and in India by 17%. High prices and a slowdown in consumer spending have suppressed demand for jewelry.

In contrast, the jewelry market by value reached $36 billion. This shows that although the amount of demand has decreased, the rise in gold prices still creates serious economic magnitude in the sector.

Expectations for Gold in the Second Half of 2025

WGC Senior Market Analyst Louise Street the 26% price increase of gold in the first half of the year emphasizes that it influences global investors and makes gold stand out as a strategic asset. According to Street, the macroeconomic environment is still uncertain and this provides a supportive backdrop for gold prices.

Experts assess the likelihood that gold will trade in a narrower band in the second half, but note that global economic or geopolitical shocks could quickly boost demand for gold's safe haven. In particular, interest rate expectations in the United States, China's economic outlook and tensions in the Middle East will play a critical role in the direction of gold prices.

Strategic Importance for Investors

This strong performance of gold is critical to investors' hedging and portfolio diversification strategies. This uptrend, supported by physical gold and central bank purchases, as well as ETFs, suggests that gold will remain attractive in the medium term. Analysts say that continued geopolitical uncertainties and economic fluctuations will be enough for the strong run in gold prices to continue.